Previous common law allowed claimants to recover damages even if certain aspects of their claim were exaggerated. However, in April 2015 the government brought into force a new law that prevents claimants from recovering any compensation for personal injury when they have been ‘fundamentally dishonest’.

The old law

In the case of Summers v Fairclough Homes Ltd[2012] the claimant was injured in an accident at work and claimed more than £800,000 from his employer. Surveillance revealed him to have grossly exaggerated the effect of his injuries. At trial he was found to have fraudulently misstated the extent of his claim but the judge declined to strike out his entire claim and was awarded £88,716 for the true reflection of the claim. The defendant appealed the award but the Supreme Court held that although it had jurisdiction to strike out the claimant’s case it would only be done in exceptional circumstances. As such the entire claim was not struck out and the claimant was awarded the appropriate compensation.

The new law

Section 57 of the Criminal Justice and Courts Act 2015 now governs the law for cases of fundamental dishonesty within personal injury claims and it looks as though it has changed the position dramatically.

Section 57 places a duty on courts to strike out an entire personal injury claim along with any element of the claim where the claimant has not been honest if, on application by the defendant, the court is satisfied on a balance of probabilities that the claimant has been fundamentally dishonest, unless by doing so there would be substantial injustice.

Application of s 57 of the Criminal Justice and Courts Act 2015

Where fundamental dishonesty is found in any aspect of “special damages” (i.e. out of pocket expenses), an entire case including the “general damages” (damages for injuries suffered) part of the claim will be lost. Similarly, if fundamental dishonesty is shown to be the basis of an “exaggeration of symptoms” the whole claim will be dismissed.

Points to bear in mind:

The dishonesty can relate to the primaryclaim, or a related claim. A related claim is defined as one for damages in respect of personal injury which is made either in connection with the same incident or series of incidents with which the primary claim is made, and is made by a person other than the person who made the primary claim. The section will therefore capture linked claims by those supporting fundamentally dishonest primary claims including those of phantom claimants such as bogus passengers.

Personal injury includes any disease or impairment of a person’s physical or mental condition and therefore extends beyondwhiplash or soft tissue injury claims.

In considering the application from the defendant, the court is afforded some discretion in cases where a strike out would cause the claimant to suffer a ‘substantial injustice’.

If a claim is struck out under this section, the court must record the amount the claimant would have received for any genuine element of the claim had it not been dismissed. The claimant will be ordered to pay the defendant’s costs, but the amount recorded for the genuine element will be deducted from the amount that the claimant will have to pay.

What constitutes fundamental dishonesty?

There is no definition of fundamental dishonesty in the CJCA 2015. However, the concept was considered in the case of Gosling v Hailo & Screwfix[2014].

It was pointed out that dishonesty that is “incidental” or “collateral” to the claim is not fundamental but dishonesty that goes to the “whole or a substantial part” of the claim is fundamental.

It was also stated that significant exaggeration and/or misrepresentation of the extent of on-going symptoms is considered dishonesty, but only exaggeration or misrepresentation that equates to around half the value of the claim is likely to constitute fundamental dishonesty.

However, it remains to be seen whether fundamental dishonesty for the purposes of the CJCA 2015 will be applied in the same way.

Conclusion

The Dismissal of a fraudulently exaggerated personal injury claim is compulsory unless the court is satisfied that the claimant would suffer substantial injustice if the claim were dismissed. There are some considerable question marks over the definitions of “fundamental dishonesty” and “substantial injustice” however the CJCA 2015 nevertheless represents a major step forward in discouraging fraudulently exaggerated personal injury claims. Claimants should therefore be wary of what the new law imposes and they should not risk ‘exaggerating’ any aspects of their claim as they risk losing everything that they may be entitled to and may also risk paying the defendants costs.